Question

What would be the compound interest on Rs 4200 for 18 months at 10% per annum compounded half-yearly?

Answer 1

Principal P = ₹ 4200

Rate of interest R = 10%

Duration T = 18 months = 1.5 years compounding is done half-yearly

A = P`(1 + ("R"/2)/100)^("2T")`

= `4200(1 + 10/200)^3`

= `4200(21/20)^3`

= `(4200 xx 21^3)/20^3`

= `(4200 xx 21)/2000`

= 4862.025

I = A – P

= 4862.025 – 4200

= 662.025

∴ Compound interest would be ₹ 662.025.